50% Homes are under Insured

Insurance companies agree that the most common reason for home owners being caught short when disaster strikes is not that they have no insurance at all but that what they have is inadequate.

“Under insurance is an insidious thing,” Jason Maxwell, Director of Maxwell and Co Real Estate said. “Once people take out home and contents insurance they tend to think they’re covered. They file their policy away and don’t look at it from one year to the next. It’s a bit like thinking you’re healthy and not bothering to have regular medical check ups.”

According to Jason Maxwell contents insurance particularly should be updated once a year, especially if the home owner has made significant purchases.

“This way if you fall victim to fire, theft, storm or other disaster you won’t find that you’ve just spent thousands on a new lounge suite or the latest in computer technology only to realise that your contents cover hasn’t kept pace with your rate of acquisition.”

According to Jason Maxwell you can choose from indemnity type insurance or new for old, but the latter offers greater benefits.

“You pay more for new for old but instead of getting the cash value of the insured items less depreciation you end up getting what it would actually cost to re-stock your cupboards, re-furnish your rooms and so on with brand new items,” Jason Maxwell said. “Insurance companies are able to value every household item from the contents of our pantry to your little girl’s Barbie doll collection.”

Jason Maxwell said that building insurance also offers a choice of indemnity or new for old.

“Once again the preference is for the latter because the insurance company will not only replace your home but also cover the cost of demolishing any remains, rubbish removal and so on,” Jason Maxwell said. “With indemnity insurance if your home burns to the ground the company replaces your home less depreciation only. Obviously the older your décor, the more you stand to gain from paying the higher premium and having the new for old option.”

According to Jason Maxwell it pays to do your homework and compare the benefits and costs of several insurance companies before committing to any particular company or policy.

“But one statistic that nearly all insurance companies agree on is that fifty percent of home owners are under insured,” Jason Maxwell concluded.

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